Musings on World events from the perspective of a Social and an Economic Liberal.

Thursday, November 22, 2007

The challenges that the next Liberal Democrat leader must address

I believe that there are several key challenges that Britain now faces and which the Liberal Democrats must address.

The role and power of the State has grown substantially over the course of the past two decades at a time when those who control the state apparatus are coming from an ever smaller pool of career politicians who lack the management skills required to administer the increasingly complex mechanisms that are supposed to deliver the promises that they make.

The result has been increasing disillusionment from an electorate that has learned that politicians can not deliver what they say. Furthermore, despite their manifest failures, the political class has largely escaped from personal responsibility for the mistakes that they make. A cosy consensus between the civil servants and successive governments has created a powerful, secretive and unaccountable State. Local government, dependent on Whitehall for its finances, has been eviscerated, and yet the legal responsibilities of Councillors are so arduous that ever fewer are prepared to take on the role except on a professional basis. Forty years ago we had MPS who were quite badly paid, since most had outside interests, and unpaid Lords and Councillors. Now the costs of our democracy have increased almost exponentially.

The scale of government has grown to a level that is beyond the capacity of the archaic systems of our constitution, and quite probably beyond the capacities of any constitution to control.

Britain faces a constitutional crisis.

In the wider world, the mismanagement of the Bush administration has created two challenges. The first is the result of the failure of the United States to deal with its lax credit market until it was too late. Essentially the United States has created an approximately $47 trillion debt that it can not repay. In effect, the fall of the Dollar is leading to a gigantic default on this debt. The overall result is that the economic role and prestige of the US- hitherto our closest ally- is being weakened at a time when it faces the new challenge of a resurgent China. Far from being a hyper-power the United States is becoming merely a first amongst several powers of roughly equal weight. Associated with this economic decline is the spectacular failure to meet the challenge of Islamic terror. The costs of the wars in Iraq and Afghanistan are beyond what the US can realistically sustain. In short, the US, leader of NATO, and of the democratic world has reached the position that Paul Kennedy warned of in the Rise and Fall of the Great Powers: Imperial Overstretch.

The challenge for Britain in the face of the decline of our leading ally is to define a new set of relationships that can maintain British security and influence. Furthermore, this must perforce be done in a manner that maintains liberal freedom. The challenge of the rise of the so-called BRIC powers- Brazil, Russia, India and China- is that neither Russia nor China are democratic and that Brazil and India have relatively unfree economies. The new economic and political world is both more politically unstable, but also more economically unstable. At some point, we may see the return of production from China to the United States as the costs of business tend to equalise. The risk is that China might become protectionist in order to weaken this process.

The consensus amongst the other European powers to meet this challenge has been to pool a degree of sovereignty and to forge closer political co-operation. However the process of reform in the European Union has been very slow and very piecemeal. There is a significant group that argue that the costs- economic and political and well as financial- of the EU, outweigh its benefits. However, in the face of the dramatic challenges emerging globally, it seems clear that a considerable effort must be made to ensure that the liberal, open economies of Europe continue to work together and to provide an example and a force that can promote liberal economics and liberal democratic values. Leaving the European Union is not an option: we must engage and make it work.

Britain faces serious political and economic challenges in this new world system.

Part of the challenge that the decline of the US Dollar and the growth of economic power in the BRIC powers is that there is a squeeze on global resources. In addition, the relatively energy inefficient Chinese economy is adding to global Carbon Dioxide emissions. As the planet faces the costs of the human population growth over the course of the next decades- leveling off at around 10 billion- combined with the forecast oil production peak, it is clear that our planet faces a serious problem of sustainability.

In the past few years, the United Kingdom has been successful in attracting high quality individuals to work in our economy. The influx of several hundred thousand people, both from inside the European Union, and to a lesser degree from outside it, has been a major factor in the success of the British economy over the past decade. It is changed our country, but by and large these changes have been welcomed. However, that there is a cost to these social changes is undeniable. Furthermore, it underlines the weakness in several key areas of British infrastructure, including especially education. While the general quality of higher education is globally competitive, the quality of British schools has not kept pace. Too many pupils leave school lacking basic skills, such as literacy and numeracy. Furthermore, the average quality of British state education, despite the soaring grade inflation showing in examination results, appears to be declining. The lack of language skills in British pupils is particularly striking. Although the UK has benefited from the influx of hard working and well educated foreigners, our domestic education levels should cause us concern.

Britain faces serious problems across its whole infrastructure- and the failure to provide timely investment is undermining our competitiveness. Although we can plug the gaps in our human capital through immigration, the weakness across our physical capital will take decades to fix- even if a sustained programme of renewal was started now, which it has not been.

In my opinion the Liberal Democrats are the British political party that most recognises the challenges that we face and has developed coherent ideas to tackle them. In particular, the ideas of accountability and political reform that the party espouses makes it more likely that the challenges that we face can be dealt with in an intellectually coherent way.

I have listened to both Nick Clegg and Chris Huhne. Both have put forward ideas that are credibly Liberal. I have not had complete answers to the questions that this big picture survey raises, but I am satisfied that both would be credible and attractive leaders. I believe that either could take advantage of what I believe could become the best opportunity to achieve the reforms we believe are required to our country and to create a more open, fairer system of government and perhaps a fairer and more tolerant society. Although as regular readers of this blog will know, I am sceptical about the value of detailed policy promises, I believe that both have the right instincts. I will be happy with either as leader.

I am close to making my decision. I will make public that decision when I have made it.

16 comments:

Matthew Huntbach
said...

But this is just not true!

Go back to the 1970s and look at all the industries that were nationalised then and are not now. Look at the detailed control the state had on the economy then, even down to enforcing a prices and incomes policy.

All that has gone now, so how on earth can you say the role and power of the state has increased since then?

Right so what you said was a lie.If the proportion of the economy under direct state control has decreased, how can the role of the state have increased?

The growth of the world economy and growing interconnectedness means the power of the state has decreased. It is increasingly subject to the dictates of global corporations, it is no longer the undisputed top dog.

So why did you lie? Was this just empty rhetoric you spouted out without thinking? Or is there some sinister agenda you're trying to promote and you thought you could do it by pulling a fast one on the gullible?

Matthew I take great exception to being called a liar. You have misunderstood my point. The role of the state is not just a fucntion of what productive assets under under stante ownership. In fact the point I am making is that the role of the state has increased substantially- legislation has made regulation more intrusive and compliance more onerous. The detailed provisions of for example health and safety legislation are a massive burden on small business. So even though levels of state ownership fell after privatisation, the fact is that the power and role of the state has increased dramatically. In any event the UK state budget is now higher than it has ever been- a fact that should give everyone pause for thought.

Slight digression, but how do you feel about Chris Huhne's apparent willingness to exclude Scottish MPs from discussing 'English' business? It sounds very much in line with the Tory proposal you condemned in an earlier posting. Does this swing you to Cleggie?

Slight digression, but how do you feel about Chris Huhne's apparent willingness to exclude Scottish MPs from discussing 'English' business? It sounds very much in line with the Tory proposal you condemned in an earlier posting. Does this swing you to Cleggie?

What we have seen in recent decades is the withdrawal of the state as an active participant in the economy. Your claim that the state's budget is now "higher than ever" is extremely misleading, since you mean that in absolute terms rather than as a share.

In short, the idea that "the power and role of the state has increased dramatically" is nuts, bonkers, and simply not supportable by the facts. The state has withdrawn from all sorts of things in which it was one active, down to such things as telling us how much money we could borrow, how much money we could take out of the country, what pay increases we should have. It has withdrawn from running our railways, from providing us with gas and electricity, and for that matter from telling us we can't shop on Sundays and what we can see in plays.

Sorry, Mr Cicero, I don't like people who spout things which aren't true.

Well Matthew I am not too keen on being called a liar on my own blog either. You are not putting forward different facts, you are disagreeing with my opinion, and my advice to you is to be at least polite when you disagree with someone.

I think that again you are misunderstanding my point. The point I am making is very clear: the role of the state- not state ownership but the role that state administration plays in regulating our society- is both more intrusive and more expensive (in relative and absolute terms) than it has ever been. This is a statement of fact. It is the case that the regulatory costs have grown dramatically- and in my view the private sector owners are facing similar levels of state interference through regulation that the nationalised industries received through staate ownership- soft power, rather than hard power, but still a significant problem. It is also, in my view a bad situation that should be tackled by reducing the regulatory burden and limiting the activities that the state undertakes.

I will not be insulted in this manner nor continue the debate until you retract your statements.

LETS SEE:Local Government?Anyone who suggests the scope an dpower of Local Government has increased vis a vis Central is deluded. Business rates, taxation capping etc have all basically neutered local power.

madasafish - your examples are almost all drawn from the balance between the local and national state, rather than from the state vs non-state.

Cicero - had you expressed yourself differently, to suggest the role of the state has increased in some areas (you seem to be thinking particularly of small businessmen), I wouldn't have disagreed. But I think the niggling things you mention are actually quite trivial compared to the wholesale dropping of state control since the 1970s. One of the biggest things, which I didn't mention, is that far fewer people are living in state owned housing than was the case. Also globalisation means the state has lost a lot of power to global influences.

Sorry, my background means I have a great tendency to pick up on waffly phraseology and see if it's is justified, and I remain convinced that yours on this issue wasn't.

On one issue at least I couldnt agree more, the inexperience and narrow focus of the current political class is all too apparent in its current dreadful performance in office and in the litany of failure in the management of change over recent years. On a practical level though Im interested how you would seek to alter this. The pressures of government and the need to market oneself over a long period in order to attain office seem to preclude the involvement of all but the most politically focussed. Does this mean you propose less overall government as well as devolving power to the local level? If so you get my vote Cicero. Bad luck re Aberdeen...better things to come no doubt

The most insidious thing which has happened is that whilst state ownership has decreased, state manipulation and control and interference has increased in different ways - often using the language of liberalism to mask this.

This has a very bad effect on the LibDems - many see the rhetoric, link it to the result and conclude that these liberal ideas don't work and we must oppose liberal ideas.

Perhaps nationalisation of industry is a pipe dream, but regulatory control is very real. The nationalisation of the individual also continues gathering speed with less privacy and schemes such as ID cards, the children's database and the DNA database.

I believe the late Chris Tame of the Libertarian Alliance saw in Thatcher a politician finding more efficient means to control, little wonder that Labour have adopted many of her ideas...